A Strong Labor Market Encourages Construction Gains

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The labor market started the new year with a solid gain as the number of residential construction jobs realized the largest growth in the past twelve months while the unemployment rate still hovers around a 50-year low. As jobs go so goes consumer confidence. According to Fannie Mae’s Home Purchase Sentiment Index This Week in Real Estate the net share of Americans who say it is a good time to buy is 14 points higher than in January of 2019. Below are a few highlights from the first week of February that influence our business:

A Strong Start for 2020. The labor market started the new year with a solid gain. Total payroll employment increased by 225,000 and the unemployment rate was 3.6% in January; still near a 50-year low. Employment in the overall construction sector increased by 44,000 in January. The number of residential construction jobs increased by 20,200 in January. It marks the largest gain in the past twelve months. In January, residential specialty trade contractors increased by 17,800, accounting for most of the gain in residential construction employment. Total construction industry (both residential and nonresidential) employment totaled about 7.6 million in January.

U.S. Homeowners Four Times As Likely To Be Equity-Rich Than Seriously Underwater. ATTOM Data Solutions released its Fourth Quarter 2019 U.S. Home Equity & Underwater Report on Thursday. This shows that 14.5 million residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value. The count of equity-rich properties in the fourth quarter of 2019 represented 26.7 percent, or about one in four, of the 54.5 million mortgaged homes in the U.S. That percentage was unchanged from the third quarter of 2019. The report also shows that just 3.5 million, or one in 16, mortgaged homes in the fourth quarter of 2019 were considered seriously underwater, with a combined estimated balance of loans secured by the property at least 25 percent more than the property’s estimated market value. That figure represented 6.4 percent of all U.S. properties with a mortgage, down slightly from 6.5 percent in the prior quarter. The top 10 states with the highest share of equity-rich properties in the fourth quarter of 2019 were all in the Northeast and West regions, led by California (42.8 percent equity-rich), Vermont (39.2 percent), Hawaii (38.8 percent), Washington (35.4 percent) and New York (35.1 percent).

Americans in 2020 are Increasingly Confident with Homebuying, Rates. Fannie Mae’s Home Purchase Sentiment Index (HPSI) is on a roll. The company’s index, based on some of the results from Fannie Mae’s National Housing Survey, increased for the third consecutive month in January and is 8.3 points higher than in January 2019. “The HPSI posted another strong reading to open the new year, helped in large part by the upward trend in the share of consumers saying they expect mortgage rates to remain steady,” said Doug Duncan, Senior Vice President, and Chief Economist. “Low rates continue to be a key driver of consumer optimism about both current homebuying and home-selling conditions. Favorable views on job security and personal financial expectations reflect the strength of the labor market, which we believe will continue to bolster housing demand.” The net share of Americans who say it is a good time to buy gained 2 percentage points to a net of 29 percent and is 14 points higher than in January 2019.

Every home listed for sale with Berkshire Hathaway HomeServices Northwest Real Estate is eligible for no obligation seller coverage for the first six months the property is listed for sale with our company.  

© 2019 BHH Affiliates, LLC. An independently operated subsidiary of HomeServices of America, Inc., a Berkshire Hathaway affiliate, and a franchisee of BHH Affiliates, LLC. Berkshire Hathaway HomeServices and the Berkshire Hathaway HomeServices symbol are registered service marks of HomeServices of America, Inc.®

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